How To Conduct Market Research in 5 Steps: A Definitive Guide

Whether you're starting a new venture, already in a phase of rapid growth or struggling to build the momentum you need - market research is a crucial tool for every stage of your business.

Real talk: What's the one thing all successful businesses have in common?

They understand who their target customers are, the problems their target customers are facing, what their expectations of a solution might be, and where, when and how they'd go searching for it.

It's understandable if you can't answer these questions for your business yet. This is why market research exists - to help you definitively answer them. By the end of this guide, you'll be well equipped with all the knowledge you need to understand your customers better and answer these crucial questions. Let's dive in.

How to conduct market research in 5 steps

Define your target audience

Outline what you need to learn from your audience

Decide what survey data you need

Conduct and distribute your survey

Extract actionable insights from the results

Step 1: Define your target audience

In order to conduct market research, you'll first need to identify the specific characteristics of the audience group you're trying to gain insights from. This should be the primary target audience for your product or service. If you're not sure of your target audience yet, here's how to identify it:

Find a granular focus

For example, if you're a clothing retailer, it's not good enough to identify that you cater to women. Women comprise of half the world's population; the target group is simply too large. The consumption behaviour within your identified target group can vary significantly when you add factors like their age, income, spending habits, marital status, occupation, education level or geographical location to the mix.

Extract characteristics from your product

If your clothing items average a $400 retail price, you can safely remove women below the age of 23 from your primary target audience, since they are less likely to be high income earners at this stage. You can also eliminate women based on their income level, as numerous studies have found that women with income levels above $150,000 spend significantly more money on clothes.

Look at your existing customers

This might help you focus your research even further. If a significant percentage of your audience has something in common: whether it's their occupation, ethnicity, likeliness to shop online or geographical location, you may be on to something. If you've seen a higher level of adoption within a significant demographic, it would be wise to lean into this and dig deeper into your customer base.

By doing this, you can adopt a funnel approach to find your target market. First start with a certain demographic (in this case gender), then narrow this further with a second filter (let's say age) and then create a final sieve that makes your audience really specific (for example, income level).

And there you have it. A target audience for our hypothetical clothing business: Women aged 25+ with a yearly income of over $150,000. If your existing customer research has helped, you can target this even further if you identify that your audience primarily shops in store, comes from a certain city, has a particular occupation etc.

Step 2: Outline what you need to learn from your audience

Now that you know who you're targeting, you should identify exactly what you need to learn from your audience.

The kind of insights that will help your business are largely defined by the stage of your business. Here are a two important stages to consider:

"I have an idea that I want to turn into a business"

Great! So you really need to get to know your target audience. For example, if you're thinking of opening your own gym, you should focus on learning whether your target audience currently exercises, where they exercise, what times they exercise, how often they exercise and how they chose their current method of exercise.

Another important insight you can get from customers at this stage is what their pain points are - what about their workout experience would they really want to change? You can get some incredibly valuable insights from this that could directly impact the effectiveness of your product itself. For example, if you find that a significant portion of your target audience hates the lack of parking area around their current gym, you'll be able to solve this problem for them by ensuring you have sufficient parking facilities around your own.

"I run a business but am struggling to grow my customer base"

Your research primarily needs to confirm that you are targeting your efforts towards the right audience, in the right way. For example, if you're currently marketing to a target group of males aged 25 - 50 who live in New York, your research needs to determine whether this audience has problems that can be solved with your product or service. You'll also need to learn whether this target group is open to the kind of of solution you're providing and the medium you're providing it through.

If you're in a competitive space, it would also be worthwhile to consider whether your target audience is currently being serviced elsewhere. In this case, it would also be beneficial to learn whether they're experiencing any pain points with their current provider and if there are any opportunities for you to solve them.

Based on the results of this research, you'll ideally learn if you're either:

a) Not targeting the right audience, in which case you should to move back to step 1 and apply your newfound insights to find the correct audience for your product.

b) Targeting the right audience, but not doing it the right way. For example, if you're currently targeting your audience via emails, though your research finds that your target group prefers being contacted via phone calls, this might be cause to pivot your marketing strategy to align with your audience.

Take some time to really think about the current stage of your company and outline in a few sentences exactly what you're hoping to learn from your research.

Step 3: Decide what survey data you need

Next, you need to translate what you want to learn into how you’ll learn it.

It may seem obvious to ask the questions that you defined above. But chances are that you actually don’t want to ask these questions outright. Instead, you want to ask questions that will give you insight from the people you’re polling. For example, you may want to learn how you can improve your service.

In order to learn ways to improve your service, what you really need to know—the data you need to collect—is where your service currently falls flat.

Rather than asking, “how can we improve our service?,” you might want to try asking customers about their specific experience:

Can you describe an experience with our service that went well?

Can you describe an experience that did not go well?

Which parts of the poor experience stand out most to you?

While this may not be a 1:1 fit with the learnings you etched out originally, the findings that come from asking these questions will give you the data that you need to actually answer the question.

This step can be the most tricky, because you need to balance two main objectives:

To create a question that will give you the data that you need

Avoid asking questions too directly that may influence the response

Chances are, most survey respondents will be thinking about what you’re trying to learn from while they take your survey. And if the questions that you ask are too on the nose, it my end up skewing what results you get.

Our top tips for asking the right survey questions:

Focus on asking questions that don't lead respondents a particular way, inject bias or lead to skewed outcome.

Avoid assumptions by wording questions in a way that is still applicable if the answer is “no”, “never”, or “none” (e.g., rather than asking “How would you rate our coffee?,” you should first ask if the respondent has tried the coffee).

Be extremely precise in your language and avoid words that may be difficult to understand or be interpreted vaguely.

One ask a single question at a time, never use double-barrelled questions or other approaches that may obfuscate the data

Take some time to research here. Botched questions could make this whole exercise pointless.

As you’re writing your survey, also consider what other text elements will need to be written. Do you need an intro? Section headings and introductions? It could also be helpful to write tips or help text that go along with your questions, to provide added context or clarification for respondents.

In general, you’ll want to create a survey that’s easy to read and navigate, isn't too time-consuming for the respondent and has an engaging user experience.

A well-designed survey can ensure that you'll have a high overall completion rate for your research. You’ll need to carefully consider the order, flow, and structure of your questions to make sure the survey doesn't feel too long to the respondent. Using section breaks to create a multi-step survey can help the user feel a sense of achievement after completing a section and make the survey feel shorter.

Distributing your survey

Depending on the nature of your business and who you’re trying to reach, there are a few different strategies that you can deploy to find respondents for your survey:

Use your existing audience. The easiest way to gather data is to start with the audience that you’ve already built. Try sharing the survey via your email list, social media channels or in-store/on-premises if applicable. If you’re sending the survey to your email list, be sure to send at least 2--maybe 3 or 4--emails asking for people to complete the survey, following up, and reminding them before it closes to ensure a higher response rate.

Partner up. If you're just starting off and don't have a suitable audience to survey, you canpartner up with another company who already has an audience that consists of the kind of audience you’re trying to reach. For instance, if you run a high-end stereo shop, you could partner with a local record store to reach music fans, run the survey together, and share the results.

Pay up. Using platforms like Google Ads or Facebook Ads, you can easily target whatever audience you’re looking to reach and ask them to take the survey. Spending a bit to reach the right audience can be a big boost to your overall campaign. And, it also allows you to reach folks outside of your current audience, even if you have built a strong brand already.

Outsource it. If you’re really just not feeling any of this, you can always pay someone else to take care of it. Use a service like Fiverr or Upwork to hire a company or freelancer to promote your survey and generate results.

Lastly, consider an incentive. It’s awfully difficult to get someone to take time out of their day to give you some feedback. It’s even more difficult if there’s really nothing in it for them. Try offering a small gift ($5 gift card) for participants, or enter them to win one larger prize like a $100 gift card or a free service.

Step 5: Extract actionable insights from the results

Quick tip: Keeping your questions simple and designing your survey in a way that will allow for simple analysis will go a long way.

It’s easier to draw basic correlations between 2 numbers than it is to recognize patterns in text usage or perform advanced analysis of multiple confounding variables.

Look for patterns in responses:

How many people rated your service a 10 versus a 9?

Was there a common theme or difference between those who rated you 7-10 and those who rated it 6 or below?

Are there patterns that emerge in terms of the titles, companies, business size, or geography?

What kind of language is used?

Keep step 2 in mind and always turn back to the learnings you're trying to extract from your research. If a question does not directly allow you to draw quantitative or qualitative insights to answer these questions, reconsider including it in your survey.

Once you launch your first campaign, it’ll get easier, faster, and better as you go on. Next thing you know, you’ll be conducting research like a pro and your whole company will be wiser for it.